2 men are charged in home loan scheme

Investigators raid homes, businesses

cars, TVs are seized

November 15, 2006|By Jo Napolitano and David Heinzmann, Tribune staff reporters. Tribune staff reporter David Jackson contributed to this report

A member of the Gangster Disciples and a North Side mortgage broker ran a mortgage fraud scheme for at least two years that ripped off "unsophisticated" home buyers for hundreds of thousands of dollars, authorities charged Tuesday.

The money that unwitting victims lost in the real estate schemes allegedly lined gang member Terry Faulkner's pockets and filled his three-car garage in Tinley Park with expensive cars, including Bentley and Maybach sedans that each cost more than $150,000, prosecutors alleged.

Faulkner, 41, and Rodrigo Navascues, of the 1900 block of North Wood Street were both arrested Tuesday and charged with one count of being the organizer of a continuing financial crime enterprise, a Class X felony, prosecutors said. A Class X felony carries a sentence of up to 30 years in jail.

Investigators also searched the offices of URB Inc., a Lincolnwood-based real estate buyer, on Tuesday. A search warrant application filed in court by investigators claimed that the owners of URB were involved in the scheme, providing cheaply bought houses to Faulkner, who in turn sold them at inflated prices to victims.

No URB officials have been charged in the case.

The investigation into mortgage fraud began in May, growing out of an ongoing gang intelligence probe of Gangster Disciples drug dealing on the South Side, said Police Supt. Philip Cline.

More than a dozen Chicago police and suburban officers descended on Faulkner's half-million-dollar house in the 7800 block of Joliet Drive North at 7 a.m. Tuesday morning, taking with them five luxury cars, including a Maybach worth more than $150,000 and a Bentley prosecutors valued at $193,000.

According to the search warrant application, this is how Faulkner's schemes worked:

Real estate dealer Brian Urbanowski, who runs URB and another firm, XEZ Inc., bought numerous distressed South Side properties for low prices, many of them acquired at tax auctions.

(Urbanowski has not been charged with any crime, and he could not be reached for comment Tuesday evening. He is described in the search warrant application as a Faulkner "confederate" who profits from Faulkner's allegedly fraudulent transactions.)

Faulkner would locate victims with an unsophisticated understanding of real estate transactions and entice them into becoming a real estate "investor," promising they would reap a windfall profit with no up-front money, according to the search warrant application. Faulkner would then select an URB or XEZ property and offer it for sale to the "investor."

Faulkner would bring the victim to Navascues, a mortgage broker, who would create a mortgage application that inflated the would-be investor's income, assets and savings, making the applicant appear credit-worthy when in fact he or she was not, according to the search warrant application.

Then an appraiser in Palos Heights would assess the property at a "wildly inflated price," the search warrant application said. The appraiser has not been charged with any crime. Police searched that Palos Heights office Tuesday.

The victim would obtain a mortgage loan and buy the home at the inflated price. At the closing, the loan proceeds were wired to Urbanowski, or URB, according to the search warrant application. Urbanowski or his company "reaps a huge profit, usually amounting to 200 percent of investment," the application said.

The victim, meanwhile, is left with a dilapidated building and a mortgage he or she cannot repay.

Faulkner declined to comment as he was led out of his Tinley Park house in handcuffs late Tuesday morning, using a beige suede jacket to cover his face.

Police said they conducted similar raids at other locations, including the appraiser's office, URB's headquarters, homes owned by Navascues in Bucktown and Wicker Park, the Northwest Side office of his firm, Hammer Financial, and another house in Country Club Hills.

Authorities say they've seized all of Faulkner's assets, from the cars and flat-screen televisions to the pants he was wearing at the time of his arrest. He has two young children, including a young boy who was present at the time of his father's arrest.

Neighbors said they had noticed Faulkner's extravagant lifestyle, especially the cars.

"He told me he was in the rehab business," said James DeMarie, who has lived on the block for 12 years. "They didn't seem to be home a lot."

DeMarie said the suspect moved to the neighborhood in July. DeMarie said that when the suspect was married last summer, a chartered bus carried his relatives to the neighborhood to celebrate; unfortunate timing for DeMarie, who was supposed to show his house to prospective buyers and worried about the ruckus.

Still, he described his neighbor as a friendly man who once offered cash to buy an expensive motorcycle from DeMarie.

Faulkner took pains to look legitimate, handing out a business card saying he worked for a company called Reliable Rehab, based in Chicago's South Side. The card also noted he was an "URB agent."

Art Hannus, a former Chicago police detective who lives behind the suspect, said he had long suspected something was awry.

Although the subdivision is one of the most stately in Tinley Park, no one else in town is driving a Bentley, he said.